Suppliers claim Glanbia targeting CMP
Glanbia, the €2 billion a year turnover global food processing group and the country’s largest dairy processor, declined to comment on the claim by Fresh Milk Producers (FMP).
A spokesman for Dairygold said it would not comment speculatively on the content of any discussion it may have with any other processor in regard to a number of possible options currently under review in relation to any part of its business.
Glanbia plc, the country’s leading supplier of branded and value added liquid milk products, was earlier warned against any attempt to cut producer liquid milk price in order to fund any acquisition of CMP Dairies.
FMP chairman Diarmuid Lally said Glanbia management had demanded an immediate cut in producer liquid milk price of 10c/gal, which would cost producers €5 million a year.
“It is widely known in the industry that Glanbia is in active discussion with Dairygold on acquiring their Cork-based CMP Dairies Division. It is simply not acceptable for Glanbia to demand an unsustainable cut in liquid milk price to support the buy-out of a competitor’s business“, he said, stressing that the cost of this acquisition could not be borne by FMP suppliers.
Pointing out that FMP have been in discussion with Glanbia on milk price since the summer of 2003, Mr Lally strongly criticised what he termed as the group’s intransigence in holding to their original demand of 10c/gal cut.
FMP, which tried without success last year to take Glanbia plc back into a farmer owned co-op, said it is currently seeking a meeting with the group’s chairman, Tom Corcoran to discuss the issues surrounding any potential acquisition of Dairygold Liquid Milk Division by Glanbia.
A spokesperson for Glanbia plc said the IFA Liquid Milk Committee is fully aware of the realities that impinge on the liquid milk market in Ireland in 2004 and to suggest that Glanbia would be influenced by anything other than market realities is disingenuous.
Shareholders in Dairygold, the country’s largest farmer-owned co-op with an annual turnover of almost 1 billion and currently undergoing a major restructuring programme, were told earlier this year that they must be aware of the challenges facing CMP. Jerry Henchy, chief executive, told a series of meetings that the liquid milk business was for the first time facing intense competition from imported product.
“This is driving down margins and creating problems for the entire sector. We will have to monitor the situation very closely on an ongoing basis,” he said. “We will also continue to drive down costs in this area in order to maintain its profitability going forward.
“As we look at the options and potential of this business, any decisions we may take to reconfigure this area of operation, will be made in the best interests of Dairygold members.”
